Households may have to pay market rates for piped gas

Rajeev Jayaswal
Over 4.77 million households and 3.25 million automobile owners may have to pay market rates for piped natural gas (PNG) and compressed natural gas [CNG], respectively.

Over 4.77 million households and 3.25 million automobile owners may have to pay market rates for piped natural gas (PNG) and compressed natural gas [CNG], respectively.

A high-powered committee has recommended withdrawal of gas supply at concessional rates to CNG users and proposed direct subsidy to only domestic kitchens.

There would be about 40-50% jump in PNG and CNG rates depending on volatility in the international benchmark rates if the recommendation is implemented, executives with state-owned natural gas processing and distribution company GAIL India and Indraprastha Gas Ltd (IGL) said requesting anonymity.

There was no response to queries sent to the ministry of petroleum, GAIL India and IGL.

IGL is currently supplying PNG to domestic kitchens at Rs 29.80 per standard cubic meter (SCM), including tax in Delhi. PNG costs large industrial consumers around Rs 43.6 per SCM. IGL sells CNG at Rs 44.70 per kg in the capital. The proposals are part of a recent report on energy security made by a committee chaired by NITI Aayog vice-chairman Rajiv Kumar. The report of the committee is under “active consideration”, two officials in the petroleum ministry said on condition of anonymity.

The committee that submitted its report last month to the oil ministry has cabinet secretary P K Sinha, oil secretary M M Kutty, department of economic affairs secretary Subhash Chandra Garg, Oil and Natural Gas Corporation chairman Shashi Shankar and NITI Aayog CEO Amitabh Kant as members.

“The CGD [city gas distribution] sector is availing subsidised gas comprising PNG for the household sector and CNG for the transport sector. The CNG sector need not be subsidised as even the market price-based gas would be cheaper compared to diesel or other fuel substitutes,” the committee said in a report. HT has seen a copy of the report.

The report added, “The subsidy to PNG can be given in the form of DBT [Direct Benefit Transfer] as in the case of LPG.”

The Direct Benefit Transfer of LPG, which is also known as PAHAL or Pratyaksh Hanstantrit Labh, was launched on November 15, 2014. Under the scheme, LPG cylinders are sold as per the market rate and the subsidy on the fuel is transferred to the eligible consumers directly into their Aadhaar-linked bank accounts. Later, consumers earning over Rs 10 lakh per annum were excluded from the subsidy.

Although there is no overt subsidy in PNG and CNG, the government has accorded the top priority for PNG and CNG consumers.

Under the policy, the CGD sector has first right over domestically-produced gas. Price of domestically-produced natural gas is regulated by the government except for gas produced from Panna-Mukta-Tapti fields, which is significantly lower than the price of imported gas.Currently, domestically-produced gas is sold at $3.36 (Rs 239.15) per unit, about 65% cheaper than the landed cost of imported gas, which is around $5.50 (Rs 391.47) per unit.

Replying to a query on subsidy to PNG consumers on August 1, 2018, petroleum minister Dharmendra Pradhan had told the Lok Sabha, “Domestic gas, which is cheaper than imported gas, has been allocated to meet the entire requirement of PNG [domestic] and Compressed Natural Gas... [Transport] segments of City Gas Distribution... sector and it has been kept under no cut category.”